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Another big bank has cut a key home loan rate, signaling that a new round of mortgage rate cuts are on their way. The RBNZ's FLP gives them the low cost funds to do this if they apply

Personal Finance
Another big bank has cut a key home loan rate, signaling that a new round of mortgage rate cuts are on their way. The RBNZ's FLP gives them the low cost funds to do this if they apply
19th Jan 21, 6:22pm by David Chaston

It has happened. ANZ is matching Westpac's carded 2.29% one year fixed rate 'special'.

While it is not really a surprise, the nine day head start Westpac has had is.

ANZ isn't changing any other rates however (and Westpac didn't either).

Readers should expect most other banks to either cut their carded offers to a similar level, or offer lower rates for other terms, or match these lower offers informally, deal-by-deal.

Probably, most will do all three.

ANZ's special interest rates require a minimum 20% equity and an ANZ transaction account with salary direct credited, otherwise their standard rate applies. Specials are not available with their package discount offers.

ANZ is also cutting -5 bps from its term deposit offers for terms six months to two years.

Remember, the RBNZ's Funding for Lending program is in place, allowing banks to access money at the OCR's 0.25%.

If banks use that funding line, they can still keep their margins intact with rates down to about 2%.

Only one bank has drawn $1 bln in the FLP line late so far, doing so late last year. $1 bln is enough to fund about 2000 home loans.

Despite these big-bank cuts, they are not the lowest one year fixed rate available. HSBC offers the same term at 2.25%, and Heartland Bank still has a 1.99% fixed offer for one year.

One useful way to make sense of these new lower home loan rates is to use our full-function mortgage calculators.

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at this time.

Fixed, below 80% LVR 6 mths   1 yr   18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at January 20, 2021 % % % % % % %
               
ANZ 3.39 2.29
2.55 2.69 2.79 3.90 3.99
ASB 3.39 2.49 2.49 2.59 2.65 2.99 2.99
3.39 2.49 2.49 2.69 2.79 2.99 2.99
Kiwibank 3.55 2.55   2.65 2.65 3.09 3.19
Westpac 4.15 2.29 3.25 2.69 2.79 2.99 2.99
               
Bank of China  3.45 2.55 2.65 2.65 2.75 2.85 2.95
China Construction Bank 4.70 2.65 2.65 2.65 2.80 2.89 2.99
Co-operative Bank 2.49 2.49 2.69 2.69 2.79 2.89 2.99
Heartland Bank   1.99   2.35 2.45    
HSBC 2.79 2.25 2.25 2.35 2.65 2.79 2.89
ICBC  2.89 2.89 2.45 2.45 2.65 2.89 2.99
 SBS Bank 3.39 2.49 2.49 2.59 2.65 2.89 2.99
 [incl Price Match Promise]  2.89 2.29
2.49 2.49 2.65 2.99 2.99

In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.

Fixed mortgage rates

Select chart tabs

Source: interest.co.nz
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26 Comments

by  Fritz  |  19th Jan 21, 6:29pm 1611034186

I said about a week ago that Anz were going to cut, although I had heard it might be to 2.2%.

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by  Uncle Bulgaria  |  19th Jan 21, 6:38pm 1611034682

Cue an economist report from ANZ's Sharon Zoellner saying high prices are a risk

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by  Fritz  |  19th Jan 21, 6:40pm 1611034823

Hahaha ha !!!

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by  Nzdan  |  19th Jan 21, 6:49pm 1611035342

Was offered 2.29% from ANZ for our mortgage top up last week.

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by  Merrydaze  |  20th Jan 21, 7:58am 1611082684

Same at ANZ. My other lender Westpac offered 2.45% 2 years and 2.49% 3 years.

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by  Hook  |  19th Jan 21, 7:08pm 1611036482

Gotta say.. I'm surprised and bemused as to why anyone would touch Kiwibank with a bargepole. So much for Anderton's "a NZ Bank for NZers" what a crock

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by  mfd  |  20th Jan 21, 11:28am 1611095334

My mortgage is with them, taken out at the best available rate at the time. I expect I'll be able to renew at a competitive rate too, they were quite flexible last time. Happy to keep my money in the local economy, although there's always SBS/TSB/Heartland for that too.

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by  Whatwillhappen  |  20th Jan 21, 11:34am 1611095692

Their floating rate is all but the lowest? But agree with the other respondent - the profits stay onshore. I'd prefer there were no profits, but the SOE Act prevents this. If the government wanted to take a cogent step towards winding back neoliberalism instead of just complain about it, they'd change the requirement to run SOEs at a profit to supply dividends to the government. It's currently a stealth tax on every NZer.

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by  Pragmatist  |  19th Jan 21, 7:16pm 1611036980

Hmmm, interest rates dropping and the ANZ/corelogic estimate jumped up $50k in a week.

The house has "made" avg $4228/week over the 37 weeks I've been tracking it. Or the buying power of the NZD has devalued that much...

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by  thinktank  |  19th Jan 21, 9:34pm 1611045250

BNZ emailed me today saying my fixed term was ending in eight weeks and that I could lock in a new rate immediately by logging in to online banking. 2.39% was the “discount” rate offered. Ha! I see through your trickery BNZ... I think I’ll wait.

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by  karl seastrand  |  19th Jan 21, 10:13pm 1611047589

thinktank...typical scumbaggery by the banks. They will often not let you lock in a rate even 5 days ahead when they think rates may be changing in their favour. Also I hope you do not pay their $5 monthly rip off account fees. I got them to waive mine.

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by  Kohukohunui  |  20th Jan 21, 6:51am 1611078703

I was going to say, I’m surprised ANZ isn’t on the phone to discuss that logo.... but I see the first version had a red phallus instead of blue, so I guess the phone call has already happened?

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by  girty  |  20th Jan 21, 8:42am 1611085355

It would help the economy if banks lowered their floating rates as people would either pay mortgages sooner or increase spending or invest in businesses.

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by  Whatwillhappen  |  20th Jan 21, 10:00am 1611090007

Kiwibank has offered a discount to PSA members of 0.5% on their floating rate (already low). Kiwibank has decided to let go of these types of discounts starting 2022. They may still be available until they time if you qualify.

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by  Mikey  |  20th Jan 21, 12:12pm 1611097959

Correct. My rates are floating at 2.9% currently. I can also get a 2.3% fixed rate with the PSA discount. With their recent announcement that they will be removing the PSA arrangement, I intend to bank elsewhere. Also Kiwibank has terrible technology. They don't offer any smartphone payment options, despite every other major bank offering this. I'm a millennial, so this is important haha. Westpac or ANZ here I come.

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by  Whatwillhappen  |  20th Jan 21, 2:07pm 1611104822

I wasn't aware of applying it to the fixed rates too, or I would have fixed already...

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by  kiwinomad  |  20th Jan 21, 9:41pm 1611132069

Mikey if tech is important to you I would vote ANZ above Westpac just FYI. The ANZ app and web portal have more functionality (like web mail for a start).

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by  Galloleous  |  20th Jan 21, 10:46am 1611092800

Just looking at t he trends I can pick out in the rate chart, it tends to drop in tough times for obvious reasons, then jack up about a year after the trouble, until they realise shit is still screwed and continue to drop rates. So maybe a hike at the end of the year for a year or so before another drop? might work out well to lock in a small portion for 2 or 3 years at some point from mid year if its up for renewal?
Any thoughts?

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by  karl seastrand  |  20th Jan 21, 12:37pm 1611099473

Gallo... you might want to google Monte Carlo fallacy. IMO chartists are just modern day fortune tellers.

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by  graintrader  |  20th Jan 21, 11:03am 1611093787

ASB are also freely quoting this number on their internet banking page. I'd suggest all the majors are here if not better. Got 2.19% for 1 year with ANZ prior to Christmas.

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by  Whatwillhappen  |  20th Jan 21, 11:30am 1611095423

Grateful if you could share your approach to getting these rates? The banks seem to hold all the cards in the negotiations.

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by  Poppyc  |  20th Jan 21, 5:16pm 1611116196

your occupation/employer can also work in your favour on rates. we are on a better slightly rate than 2.19% for a 1 one year loan but it is tied to employment

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by  rogerthat  |  20th Jan 21, 2:09pm 1611104990

what sort of cash back are people getting at the moment. about to borrow ~1m in the next few weeks. cheers

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by  mikekirk29  |  20th Jan 21, 2:14pm 1611105246

Q: when inflation is 5% an OCR is 0.5%, what WILL RB do?
And what will wages rise by to compensate? Half as much no doubt.

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by  SocialCredit  |  20th Jan 21, 11:24pm 1611138244

"Remember, the RBNZ's Funding for Lending program is in place, allowing banks to access money at the OCR's 0.25%."
Pleased to see the article is not suggesting that the banks are then lending that money (although it doesn't say they're not either). They are not. That money goes into their reserves and they create new money (out of thin air) to lend. For every $1 million they access from the Reserve Bank they can create and lend $9 million or more.
Trouble is that lending is going mostly into the housing market instead of into small and medium business - the productive sector of the economy.

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by  Pusheen  |  20th Jan 21, 11:54pm 1611140081

Whrrt.. rumbling down, that's one would feel seen that graphics, just like throttle idling engine being tweak low further.

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